Binary options trading attracts many traders with its simplicity and the ability to make high profits relatively quickly. However, despite the apparent ease, successful work with digital contracts requires a clear strategy and a deep understanding of market instruments.
The most popular approach to trading, which has proven its effectiveness in practice, is the use of technical indicators. This article will consider a trading strategy called “Seeker”, which is based on a combination of signals from the RSI and Envelopes indicators. This system allows you to almost find entry points accurately into a transaction, which makes it very attractive for most traders.
More about the strategy and the settings
The Seeker strategy is based on a combination of two popular indicators: RSI and Envelopes, which are already pre-installed in the trading platform from the Pocket Option broker. The goal of the methods is to determine moments of excess demand or supply using RSI, and Envelopes helps to designate the boundaries of price movement to find reversal points.
It was developed by a group of experienced trades to analyze the market situation. They recommend using candlestick chart because it is the most informative. They recommend setting the timeframe to M5 (5 minutes). This allows you to receive enough signals during the trading day and avoid market “noise”, as in turbo options.
The best assets for this strategy are currency pairs with high volatility (e.g. EUR/USD, GBP/USD). These instruments provide more trading opportunities due to frequent price fluctuations.
How to set up the indicators:
- RSI (Relative Strength Index): Set the period to 14, levels 30 and 70. These levels indicate the “overbought/oversold” zones. When RSI rises above 70, it signals a possible downward reversal. When RSI falls below 30, an upward reversal is possible.
- Envelopes: Settings depend on the asset and market volatility. A period of 14 and a deviation of 0.1% are usually used. This indicator plots two moving averages – the upper and lower boundaries, which serve as support and resistance levels.
In general, at this point the settings are done and it is time to start trading.
How to Trade with the Seeker Strategy
As you may have guessed, the Seeker got its name for a reason. Trading on a 5-minute timeframe, the trader searches for optimal points for buying a contract throughout the session, relying on indicator signals. It is worth noting that there may be quite a lot of such signals.
The signal to buy a call option (CALL):
- When the asset price touches the lower line of the Envelopes indicator and the RSI is in the high supply zone (below level 30), this indicates a possible upward price reversal.
- We expect confirmation of the signal in the form of the beginning of price growth and an increase in RSI above 30.
The signal to buy a put option (PUT):
- When the asset price reaches the upper Envelopes line and the RSI is in the high demand zone (above 70), this indicates a possible downward reversal.
- We wait for confirmation of the signal when the RSI begins to fall below 70 and the price of the asset begins to fall.
Additional recommendations:
- You should not open trades against the main trend. If, for example, the general trend is upward, signals to the downside may be less effective.
- You should consider market news. Strong economic reports can change the trend direction abruptly, which can affect the outcome of the trade.
- You should use money management, investing no more than 2-5% of the deposit in each transaction.
The Seeker strategy for binary options, based on the RSI and Envelopes indicators, allows traders to accurately determine price reversal moments and effectively use them to make a profit. This technique is easy to use and is suitable for both beginners and experienced traders.
The key to success is discipline, adherence to strategy rules and risk management. With the right approach, the Seeker can become a reliable strategy for consistent profitable trading.
